European Chemicals & Ingredients: Should we be worried about the Rhine?

研报英文原文证据摘录

European Chemicals & Ingredients: Should we be worried about the Rhine?

Barclays | European Chemicals & Ingredients

The El Niño backdrop raises the risk of below-normal rainfall and increased evaporative

stress across parts of Central Europe, although weather outcomes remain inherently

uncertain. Taken together, low reservoir levels, reduced Alpine snowmelt and the prospect of

continued hot and dry weather suggest the Rhine is entering the most critical part of the year

from a weaker than normal hydrological position. Recent ICIS reporting has already highlighted

higher freight rates, partial barge loadings and logistics challenges across products including

butadiene, acetic acid, methanol, aromatics and acrylates during recent periods of low water4 .

FIGURE 2. The Rhine water levels around Kaub, the Rhine's key navigation bottleneck, recently fell to

around 90cm, the lowest reading for early July in more than 20 years and well below both 2018 and

2022 drought levels for the same point in the year. However, investments post-2018 resulted in

negligible financial impacts in 2022.

Source: German Federal Institute of Hydrology, Barclays Research

What has changed since 2018?

The most important difference versus 2018 is that chemical producers are substantially

better prepared. Following the disruption experienced eight years ago, BASF invested a mid-

double-digit million euro amount to improve the resilience of Ludwigshafen. The company

expanded its fleet of low-water barges, commissioned the specialised Stolt Ludwigshafen vessel,

implemented an early warning forecasting system that can provide up to six weeks' notice of

potential water-level declines, increased inventory flexibility and strengthened rail and road

logistics infrastructure.